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Tanzania Roads Agency loses Sh278 million appeal case

By Wahome Thuku | November 4th 2013 at 12:00:00 GMT +0300

By Wahome Thuku

Kenya: Sometime in 2007, the Tanzania Roads Agency (TRA) entered into a contract with Kundan Singh Construction Company for the upgrading of the Mbeya-Makongolosi Road in Tanzania.

On August 1, 2007, Kenya Commercial Bank (KCB) issued the construction firm with a Bank Performance Guarantee for the payment of Tsh 2.75 billion (about Sh152.5 million)

On September 6, 2007, KCB issued the roads agency with an advance payment of Tsh1.1 billion (about Sh61 million). The money was to be paid by TRA to the company under the terms of the contract. On the same day, the bank gave a similar undertaking for $3.5 million (about Sh278 million)

A legal dispute arose and on March 12, 2009, Kundan Singh Construction Company filed a suit at Milimani Law Courts in Nairobi against TRA and KCB arising from the said guarantees. While that case was still pending, TRA filed their own suit in Mombasa, against the construction firm and KCB, raising issues that were substantially and directly in issue in the Nairobi case.

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On March 30, 2010, Kundan Singh Construction applied to have the suit in Mombasa dismissed with costs. Alternatively, they asked the court to stop the proceedings pending the hearing and determination of the one filed in Nairobi. The following day, on March 31, 2010, KCB filed a similar application. The two applications went before Mombasa High Court Judge Festus Azangalala.

Separate case

The companies argued that the issues raised in the Mombasa case were also an issue in the case filed in Nairobi hence the matter was already before another court.

The application by Kundan Singh Construction Company was supported by an affidavit sworn by the director Opkar Singh Obhi while that of the KCB was supported by an affidavit of Legal Manager Isaac Njoroge.

Mr Singh argued that by filing the case in Mombasa, TRA had violated Section 6 of the Civil Procedure Act and that it was only searching for a suitable forum to determine the case. He said TRA was aware or ought to be aware that there was an injunction issued in the Milimani case restraining KCB from paying the construction firm the Tsh2.7 billion pending the determination of the suit.

Mr Njoroge argued that if TRA had any claim against KCB, they should had it dealt with in the Milimani case and not by a fresh and separate case.

Through the bank’s lawyer Philip Nyachoti, they submitted that the Mombasa High Court had no jurisdiction to entertain the case hence it should be struck out. Alternatively, they argued that it should be put on hold pending the hearing and the outcome of the Milimani case.

TRA opposed the two applications saying they were bad in law, frivolous and vexatious.

On July 29, 2010, the judge allowed the applications and suspended the proceedings of the case filed in Mombasa pending the determination of the one filed in Nairobi.

TRA was aggrieved by the ruling and filed an appeal at the Court of Appeal in Mombasa. They raised seven grounds of appeal, one being that the High Court erred by finding that TRA was the same as the agency itself.

The appeal went before three judges of the Court of Appeal sitting in Mombasa.

Legal absurdity

The agency’s lawyer Joseph Munyithya maintained that the parties in the Nairobi and Mombasa cases were not the same. In the Nairobi case, the first defendant was the TRA CEO while that was different in the Mombasa case.

He submitted that even the issues in the two cases were different. Lawyer O.P. Nagpal appearing for the construction firm said he had been able to demonstrate at the High Court that there were various overlapping issues between the two cases. He argued that both the TRA CEO and the agency itself were one and the same thing in the cases. The agency could only act through its CEO.

Lawyer Nyachoti appearing for KCB submitted that the two cases were similar, pointing out that a certificate of urgency filed in the Mombasa case was the same as one filed in Nairobi.

Nyachoti said there were various other documents in the two cases related to the same contracts entered into in 2007. Affidavits filed in the cases had been sworn by the same persons arguing that the issues raised in the cases were substantially the same or similar.

“That being the case, there can be no issue of different identities of the parties,” the lawyer said, adding that even where he worked, there was no distinction between the organisation and its CEO.

All the lawyers agreed that the case pending at Milimani has already proceeded to near conclusion.

The judges considered that the Milimani case had run its course hence they did not need to go into the merits of the appeal before them. They reasoned that whatever decision they made, it would have no effect on the case pending at the Milimani court noting that if anything, there was a risk of turning it into a legal absurdity.

Looking at the circumstances, the judges ruled that they would likely be closing the stable when the horse had already bolted in whichever way they made their determination on the merits of the appeal. They ruled, “As the advocates involved have in a way or another actively participated in getting the two cases murky, each party shall bear its costs of this appeal.”

This means the determination of the Nairobi case would take precedence.

Tanzania Roads Agency Kundan Singh Milimani Law Courts
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